Gross Rent Multiplier (GRM)
Quick property screening with GRM = price ÷ annual gross rent. Lower GRM = better cash yield. Compare against market range for your city. Browser-only.
What is GRM?
The Gross Rent Multiplier is the simplest property-pricing yardstick that exists: price ÷ annual gross rent. If a building costs $400,000 and rents for $26,400/year, the GRM is 15.15×. The interpretation: at this price, it would take 15.15 years of gross rent to recover the purchase price, before any expenses. Lower GRM = better cash yield per dollar of price.
It's the cheap-and-cheerful cousin of cap rate. Where cap rate uses NOI (net of operating expenses), GRM uses gross rent (before any deduction). This makes GRM faster to compute — you don't need an expense estimate — but lossier. Two buildings at the same GRM can have very different cap rates if one has high property tax or HOA. GRM's value is in screening: rank a list of comparable properties in 5 minutes, then move the top candidates into proper underwriting.
The formula
GRM = Price ÷ Annual Gross Rent Implied gross yield = 1 ÷ GRM × 100% Max price at target GRM = Rent × Target GRM
Typical market ranges (rough, 2026)
| Market | Typical GRM | Implied gross yield |
|---|---|---|
| Primary coastal city (NYC, SF, LA) | 18–28× | 3.5–5.5% |
| Primary non-coastal (Chicago, DC, Boston) | 14–20× | 5–7% |
| Secondary metro | 10–15× | 7–10% |
| Tertiary / midsize | 7–12× | 8–14% |
| Rural / small market | 5–10× | 10–20% |
| European mature (London, Paris, Madrid) | 20–35× | 3–5% |
| Eastern European mid-tier (Prague, Bratislava, Wrocław) | 12–18× | 5.5–8% |
When to use GRM
- Sorting a long list of comps. Twenty MLS listings: compute GRM for each in five minutes, focus due-diligence time on the bottom quartile (best yield) for follow-up.
- Smell-test on a single deal. A 25× GRM in a tertiary market is suspicious — either rents are about to spike (story to verify) or the price is wrong.
- Quick negotiation framework. "The market's at 12× GRM and they're asking 14× — let me start at 11×."
- When operating expenses are not available. Off-market listing with no opex disclosure: GRM is what you have.
When NOT to use GRM
- Comparing two properties with very different operating costs. A 1950s wood-frame in a high-property-tax state has very different expenses from a 2020 concrete-frame in a low-tax state. Same GRM, very different actual cash yield. Switch to cap rate.
- Properties with concessions or below-market rents. If contract rent is 20% below market because of long-term leases, the GRM looks artificially high. Underwrite to market rent.
- Mixed-use or commercial assets. Cap rate is the convention; brokers and lenders won't engage with GRM-only analysis above small residential.
- When debt service matters. GRM tells you nothing about whether a loan will be sized to cover. Use DSCR and cash-on-cash for that.
Common mistakes
- Confusing gross with net. Gross rent = before vacancy, before any expense. Net rent / NOI = after expenses. Multiplying the wrong number gives the wrong yardstick. GRM is always gross.
- Using monthly rent. $2,200/month × 12 = $26,400 annual. People sometimes drop the ×12 and end up with an unusable "GRM = 181×."
- Letting GRM substitute for cap rate. Two properties at GRM 14 can be a 7% cap and a 5% cap — that's a 40% gap in actual yield because of expense differences. Always re-underwrite with real opex before offering.
- Cross-market comparisons. A 12× GRM in San Francisco is not the same as a 12× GRM in Pittsburgh — different tax regimes, different appreciation expectations, different vacancy norms.
Pairs with
- cap-rate — the proper-grade analysis once a GRM screen flags a property.
- noi-calculator — produces the NOI input that cap-rate needs.
- rental-yield — close-cousin metric expressing the same idea as a percentage.